Australia's LNG lifeline faces fresh uncertainty as strike battle intensifies

Workers at Inpex's Ichthys LNG facilities in Australia began limited industrial action on Tuesday, marking the latest escalation in a long-running dispute over pay and working conditions, according to Reuters.

The strike, led by the Offshore Alliance and supported by the Electrical Trades Union (ETU), follows months of negotiations that have failed to deliver a new enterprise agreement.

Initially, workers will stop work for two hours in the morning and two hours in the evening, alongside other work restrictions.

However, unions have warned that far broader industrial action could begin on 11 June and continue until 23 June, potentially disrupting production and export operations at the 9.3-million-tonne-per-year LNG project.

Supply risks

The threat comes at a sensitive time for global energy markets.

Ichthys accounts for around 10% of Australia's LNG exports. Australia has become the world's second-largest LNG exporter after damage to facilities in Qatar linked to the Iran war tightened global supply.

The timing is particularly significant for Japan, which relies heavily on Australian LNG imports and is facing concerns over supply security.

"INPEX remains focused on maintaining safe operations at Ichthys LNG – and importantly, ensuring reliable energy supply to our key trading partners in the Indo-Pacific region amid disruption to global energy markets," Senior Vice President Corporate Bill Townsend said in an emailed statement.

Talks stall

The Offshore Alliance, comprising the Maritime Union of Australia and the Australian Workers' Union, said industrial action became necessary after Fair Work Commission-facilitated bargaining failed to resolve key claims.

The union group had postponed strike action last week after reporting progress in discussions with Inpex. However, it now says negotiations have stalled.

“The response from Inpex has been underwhelming and shows that the company is not taking the negotiations seriously,” the union group said in a statement.

Inpex rejected suggestions that talks had broken down and said it remains committed to reaching an agreement.

The company said it "will continue to engage in good faith with employees to reach a fair and equitable agreement."

LNG loadings targeted

A fresh industrial action notice issued on Tuesday contains more than 100 separate work stoppage measures.

Among the most significant is a proposed ban on activities linked to preparing, connecting and loading LNG, LPG and condensate from onshore storage tanks to export vessels.

If implemented, the restrictions could directly affect cargo loadings and exports from the Darwin-based facility.

Global impact

The Ichthys project is a major supplier to energy buyers across Asia.

French energy giant TotalEnergies receives 1.8 million tonnes of LNG annually from the facility, while Taiwan's CPC Corporation takes 1.75 million tonnes. Several Japanese utilities are also key customers.

Negotiations for a new enterprise agreement have been ongoing for more than eight months.

According to the Offshore Alliance, meaningful progress only emerged after Australia's labour tribunal stepped in to oversee discussions in recent weeks.

The dispute is being closely watched by global energy markets. The same union alliance organised strikes at three Australian LNG projects in 2022 and 2023, triggering concerns over international supply and pushing up LNG prices worldwide.